Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Edinburgh Investment Trust. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
EDIN looks leaner and meaner under its new manager and has outperformed since the takeover…
Overview

Edinburgh Investment Trust (EDIN) has become leaner and meaner under lead manager James de Uphaugh and deputy manager Chris Field of Majedie Asset Management, who took over in March 2020. As we discuss under Performance, they have generated significant outperformance already, having created a more balanced portfolio intended to generate sustainable dividend and capital growth as well as income.

The underlying dividend was reset in the last financial year to four equal quarterly payments of 6p, which if repeated this financial year would annualize to a yield of 3.8%. As we highlight under Dividend, the yield under the previous manager was arguably unsustainable, and the payout unlikely to be grown in excess of inflation over the long term. The new Portfolio has less pronounced value characteristics, with more exposure to growth potential. James and Chris aim to find mispriced companies which can grow their earnings faster than the market expects, leading to dividend growth potential.

In September, the trust will receive a boost when old expensive debt finally matures and is replaced with debt that will cost over 5 percentage points less to service, increasing future total return potential. Structural debt is just under 9% of net assets at present, and the beta to the FTSE All-Share tends to be quite high (see Performance). That said, James has allowed some cash to build up in recent months as he is wary of volatility surrounding rate hikes and quantitative tightening. However, in the medium term, the managers believe the UK continues to be under-valued versus developed market peers and are finding opportunities in various industries, taking a contrarian view on some companies, as they have already done successfully since taking over the portfolio.

Analyst's View

Edinburgh Investment Trust (EDIN) looks well set up to be a core savings vehicle for an investor who wants to generate a healthy income but places high importance on dividend growth. This is likely to include those who want to reinvest their income to benefit from the magic of compounding as well as those who expect to be drawing down their income for many years and therefore require growth to keep up with inflation.

James and Chris do have a tilt to value over growth, as is inevitable with an equity income portfolio, but this is not pronounced, and most of their holdings are classified as core. This means the portfolio is unlikely to be massively exposed to future stylistic shifts in markets, reducing one source of volatility. While James has not committed to maintaining this style bias, we believe it is likely to remain roughly consistent due to the focus on dividend growth as well as income.

Early results from the new portfolio have been good. The success has been built largely on stock-picking rather than sector calls, although building a significant position in mining stocks immediately after taking over the trust was a major contributor. In this call, the benefits of a patient contrarian approach were visible. The decision to buy ‘reopening’ stocks before the announcement of a successful covid vaccine is another good example. Of course, like any active approach, it may not always work to investors' advantage.

bull bear
Managers have track record of long-term outperformance
Structural gearing can enhance losses in falling markets as well as gains in rising markets
Focus on dividend growth should lead to attractive long-term income generation
The UK market has little in some structural growth areas such as technology
Low OCF, so offers low-cost access to UK equities
Rebased dividend may not grow this year
Continue to Portfolio

Fund History

29 Apr 2022 Five trusts to diversify your portfolio income
Join us next week for one live webinar with a different manager every day of the week – including the chance to ask questions - focused on different solutions for those seeking a decent income…
23 Feb 2022 Fund Analysis
EDIN looks leaner and meaner under its new manager and has outperformed since the takeover…
08 Jul 2021 London Calling
UK equities represent a ‘once in a generation’ opportunity for investors according to the managers who joined us to discuss the outlook at our event last week…
07 Jul 2021 Slides and Audio: Edinburgh Investment Trust
Download the presentation and listen to the audio from our 'Cool Britannia' Summer conference on 01 July...
07 Jul 2021 Slides and Audio: Roundtable - The outlook for UK plc
Download the presentation and listen to the audio from our first roundtable discussion with James Henderson, James de Uphaugh and Rory Bateman...
23 Jun 2021 Time to back Britain?
After a challenging period for the United Kingdom, we wonder if it could be the most exciting market on a five-year view…
09 Jun 2021 Cool Britannia?
Join the team at Kepler Trust Intelligence and six leading UK fund managers as we examine the prospects for UK equities with COVID in retreat and Brexit uncertainty finally behind us…
13 Apr 2021 Fund Analysis
EDIN’s new management team continue to identify individual stock opportunities in the UK..
29 Jan 2019 Mark Barnett: the outlook for UK equities in 2019
With uncertainty over Brexit clouding the view, Mark Barnett, Invesco’s Head of UK Equities based in Henely-on-Thames, provides his investment outlook for 2019...
05 Nov 2018 Do politics matter?
With the pivotal US mid-terms looming, politics are front of mind for many investors - but should they be?
03 Oct 2018 We can be heroes
Our analysis has uncovered the trusts which have generated a solid income through thick and thin - without compromising other aspects of performance...
26 Jul 2018 Is the UK keeping this investor awake at night?
Over a year on from taking over his UK equities trust mandates, Invesco's James Goldstone discusses his outlook for UK markets...
18 Jul 2018 Fund Analysis
A large UK focused investment trust with a strong long-term record trading on a deep discount thanks to an out-of-favour style...
08 Jun 2018 Mark Barnett: Business as usual?
Invesco Perpetual’s head of UK equities Mark Barnett examines the sectors where he is finding opportunities...
09 Mar 2018 Keep calm and carry on...
We examine the reaction of investment trust discounts amid recent market volatility...
20 Nov 2017 Thin ice...
Our analysis shows the extent to which funds in the UK equity income sector are concentrated on just a few dividend paying stocks…
07 Nov 2017 Fund Analysis
A large, well resourced UK equity income trust with a highly experienced manager and a clear focus on total return...
21 Jun 2017 Keystone Investment Trust
A top-performing UK equity trust that has recently undergone a change in managers...
12 Jun 2017 MAYDAY!
As the Conservative party founders, we examine the impact of last week’s disastrous election on trusts...
07 Jun 2017 Omnishambles...
Given the huge levels of political-induced uncertainty, we analyse recent drivers and themes within the UK equity market ahead of the upcoming election
30 May 2017 Income funds in focus
We introduce a new rating system designed by us to identify trusts which generate a real, dependable income without sacrificing capital....
11 May 2017 Storm proofing...
Our research shows dividend cover among UK equity income trusts is at its highest level in decade...
07 Dec 2016 Video: City Merchants High Yield Trust Limited
Rhys Davies discusses high yield bond opportunities, looking at what has been driving performance, alongside his approach and outlook.
06 Dec 2016 Video: Invesco Perpetual Select Trust Global Equity Income Share Portfolio
Nick Mustoe shares his thoughts on the Global Equity Income Share Portfolio of the investment trust, and gives his views on the regions and sectors he currently favours.
10 Sep 2016 Video: UK equities investment trusts update
John Richards, product director, UK equities, discusses the implications of the UK's referendum on membership of the European Union
09 Sep 2016 Video: Invesco Income Growth Trust
Fund manager Ciaraon Mallon discusses the portfolio and his approach to asset allocation...
06 Sep 2016 Video: Invesco Asia Trust
In this video Invesco Perpetual's Ian Hargreaves provides an economic outlook, and explains his approach to managing the portfolio...
05 May 2016 Mark Barnett: Two distinct routes to a sustainable income
Contrasting portfolio construction of The Edinburgh Investment Trust plc and Perpetual Income and Growth Investment Trust plc offers choice to income-seeking investors
03 May 2016 Video: Nick Mustoe
Invesco CIO Nick Mustoe explains his strategy on global equities...
11 Feb 2016 View from the top: Jim Pettigrew
We meet the chairman of one of the UK's largest investment trusts...
03 Feb 2016 Sector report: What lies beneath
Amid growing unease over the security of dividends we highlight a number of equity income trusts for a harsh environment...
View all

Welcome to Kepler Trust Intelligence

Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority.
Please enter a valid email address
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid email address
{{item.msg}}
Please check your email. If an account exists you'll be sent instructions on how to reset your password.
Kepler Trust Intelligence is authorised in the UK by the Financial Conduct Authority. To ensure that we are able to provide content which is appropriate for you, please tell us a little about yourself.
Please choose an option
{{item.msg}}
Please enter a company name
{{item.msg}}
Please enter a location name
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a platform
{{item.msg}}
Please choose an option
{{item.msg}}
Please enter a trust
{{item.msg}}
?
The information contained herein is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States to or for the benefit of any United States person (being residents of the United States or partnerships or corporations organised under the laws thereof). The investment funds referred to herein have not been registered in the United States under the Investment Company Act of 1940 and units or shares of such funds are not registered in the United States under the Securities Act of 1933.
Please confirm
{{item.msg}}
Please select an option
{{item.msg}}
See benefits
A free Kepler Trust Intelligence account allows you to access premium content including the ‘Kepler View’ – our verdict on the trusts we cover – and historical research so you can see how our view has changed over time. An account also unlocks useful facilities like the ‘follow’ button which lets you keep track of the trusts you’re interested in and as a logged in user you can also download PDFs of our research, and choose the layout of the page you’re reading to suit your preference. We will not share your details unless you give us permission to do so, and we won’t bombard you with emails – we only send one a week.
Please select an option
{{item.msg}}
Please enter your first name
{{item.msg}}
Please enter your last name
{{item.msg}}
Please enter a valid email address
An account already exists with this email - have you forgotten your password?
{{item.msg}}
Please enter a valid password
{{item.msg}}
Please enter a valid password
{{item.msg}}
How will this information be used? Your answers help us to tailor our content to relevant investment trusts, and to ensure that the asset allocation and portfolio strategy research we produce is appropriate to our userbase.
Our Website uses Cookies Cookies are small text files held on your computer. They allow us to give you the best browsing experience possible and mean we can understand how you use our site. Some cookies have already been set. You can delete and block cookies, but parts of our site won’t work without them. By using our website you accept our use of cookies. For further information please refer to the Kepler Privacy Notice.
Need help?

One more thing...

Did you know, you can 'follow' individual trusts on Kepler Trust Intelligence? Use the functions below to set up alerts and we'll send you research and updates on your chosen trusts.

Suggested trusts to follow

Browse all funds
Need help?
Current Site Kepler Trust Intelligence is produced by the investment companies team at Kepler Partners and is the UK’s premier source of detailed qualitative research on investment trusts. Absolute Hedge is a market leading UCITS research database providing proprietary research on funds, themes and strategies in the UCITS space. Kepler Liquid Strategies is a Dublin domiciled UCITS fund platform featuring a number of best-of-breed fund managers. Kepler Partners is a corporate advisory and asset raising boutique specialising in the regulated funds market in Europe and investment trusts in the UK.